Lead Opinion
OPINION
Plaintiff-Appellant Dottie Renee McAl-pin challenges on jurisdictional grounds two district court orders holding her in contempt of the court’s prior orders and of the settlement agreement that the parties executed in an effort to terminate the litigation underlying this appeal. Only one small part of the settlement agreement was incorporated into the court’s order dismissing the suit. Thus, the court had no jurisdiction with regard to most of the order appealed from. We therefore reverse and remand for consideration of an order within the court’s jurisdiction.
I
History of the Litigation
Plaintiff-Appellant Dottie Renee McAl-pin brought the suit that gave rise to the settlement agreement at issue in this appeal in her capacity as administratrix of the estate of her late father, Robert T. Mock, and as an alleged shareholder of the primary defendant in this case, Appalachian Oil Company (AOC).
McAlpin’s father, Robert Mock, was an AOC employee who was discharged by the company in the early 1980’s. According to McAlpin, Mock owned 25% of AOC’s stock when he was discharged, and had an option to acquire an additional 24% of the company’s outstanding shares, which option he allegedly attempted to exercise after he left the corporation. When Mock’s efforts to exercise the option were rejected by the company on May 28, 1983, Mock filed suit in the Pulaski Circuit Court to enforce his rights against AOC and its directors. Although Mock prevailed on his claims for past wages, his breach of contract and other claims were dismissed without prejudice for lack of venue. Mock died in March 1986, and Dottie Mock, his widow and the adminis-tratrix of his estate, refiled his breach of contract claims against AOC in Knox County Circuit Court, but the case was dismissed in April 1995 for lack of prosecution. When Dottie Mock died on September 6, 1994, McAlpin was appointed admin-istratrix of her father’s estate, and her husband Tim McAlpin was later appointed co-administrator. With Tim’s assistance,
Procedural History in the District Court
McAIpin filed suit against AOC in the district court on February 19, 1997. According to McAIpin, Brandon, who offered to take the case on a contingency basis and to advance the Estate’s litigation costs, advised her: (1) that the Estate had the best chance of recovering against AOC in a shareholder derivative suit on behalf of, and for the benefit of, AOC; (2) that he would ask for a temporary restraining order and for the appointment of a receiver upon the filing of the federal court complaint; and (3) that AOC would ultimately be responsible for the payment of all feеs, costs and expenses. As evidenced by the statements in her brief, McAIpin was well aware that Brandon’s “litigation strategy” contemplated the “appointment of a receiver to take over the assets, records and operations of AOC” and to “uncover more recent actionable offenses with the limitations period.” Appellant’s Br. at 10. In short, McAIpin was well aware that, despite her statements to the district court that a receiver should be appointed simply to prevent AOC from destroying evidence or mismanaging assets,
Based on the supporting affidavits, the district court issued a temporary restraining order on February 19, 1997, enjoining AOC from destroying, altering and/or concealing documents and from disposing of corporate assets. The court also granted McAlpin’s request to appoint Gahafer as receiver. At the time it issued the order appointing Gahafer, the district court believed, based on McAlpin’s representations, that Gahafer’s receiver’s bond (secured by Ohio Casualty in the amount of $500,000) would serve as security pursuant to Federal Rule of Civil Procedure 65(c) for any costs or damages incurred by AOC were it subsequently determined that the company had been wrongfully enjoined or placed in receivership.
Upon realizing that, despite McAlpin’s representations, Gahafer’s bond was not a true injunction bond but served only to indemnify AOC for damages resulting from Gahafer’s failure properly to account for funds that came into his possession as AOC’s receiver, the district court on March 5, 1997, issued an order directing McAlpin to post a surety bond in the amount of $500,000 no later than 4.00 p.m. that day. The court also directed Gahafer to submit a proposed order clarifying his duties in the litigation. The district court extended the TRO until March 6,1997, and ordered Gahafer to submit a balance sheet detailing AOC’s assets and liabilities. At a hearing on March 6, 1997, the district court was informed that McAlpin had not posted the required surety bond as directed by the court’s March 5 order,
On May 1, 1997, Gahafer moved the district court to alter or amend the March 10 order to provide that McAlpin would be held in contempt if she continued to withhold payment of his fees. McAlpin filed a response stating that the Estate was insolvent and that Gahafer’s fees should be taxed against AOC and its cо-defendants. McAlpin thereafter sought, in spite of the district court’s March 10 order, to obtain Gahafer’s First Interim Report and to obtain documents that Gahafer seized during his receivership by filing a Notice of Deposition and Subpoena Duces Tecum compelling Gahafer to .testify at a deposition on June 16, 1997. On June 4, 1997, Gahafer sought a protective order against McAl-pin’s subpoena, and on July 18, 1997, the district court entered a comprehensive ruling disposing of the parties’ various motions and clarifying its March 10 order dissolving both Gahafer’s receivership and
In its July 18 order, the district court also declined to tax Gahafer’s fees against AOC, noting that it had made it “very clear” in its March 10 order that McAlpin was responsible for paying Gahafer’s fees. The district court denied Gahafer’s motion for a show cause order on the basis that it would be unfair to punish McAlpin for failing to pay Gahafer before the court ruled on her motion to amend its March 10 order. However, having denied McAlpin’s motion to amend, Judge Hood on July 18 directed her not to delay any further and to pay Gahafer’s fees within ten days. The court then sustained Gahafer’s motion for a protective order, quashed McAlpin’s subpoena, held that McAlpin could not depose Gahafer, and held that Gahafer would not be required to produce any document or to respond to any discovery in connection with McAlpin’s suit against AOC. In addition to granting Gahafer’s motion for a protective order, the court granted AOC’s motion to amend the court’s March 10 order dissolving the receivership to reflect the court’s March 6 ruling that:
The Receiver shall return all documents taken from the defendants’ premises, ... the Receiver shall not disclose any document or portion thereof to anyone, and ... any copies made shall also be returned to the defendants.
McAlpin failed to pay Gahafer’s fees within 10 days of the district court’s July 18 order and, on July 31, 1997, Gahafer moved to hold McAlpin in contemрt. Ga-hafer also requested that the court divest the Mock Estate of any interest in, or claim of ownership to, the corporate stock of AOC and vest such right, title, interest or claim in him. In the alternative, Gahafer moved the district court to issue a writ of attachment or sequestration against the Mock Estate’s only asset- — -its alleged ownership interest in AOC — in order to effect compliance with the court’s July 18 order. McAlpin filed a response on August 15, 1997, stating that the Mock Estate was insolvent and that it would be inappropriate for the court to hold it in contempt. McAlpin’s counsel then proposed that the court require AOC to reissue 1.61 of the 13 shares of AOC stock allegedly owned by the Mock Estate to Gahafer to secure his fees, and that AOC remit the remaining 11.39 shares to the Estate.
On September 2, 1997, the district court filed an extensive order dismissing McAl-pin’s suit on the merits and disposing of the parties’ pending motions. In the September 2 order, the district court: (1) dismissed with prejudice as time-barred MсAlpin’s civil RICO claims; (2) declined to exercise supplemental jurisdiction over McAlpin’s remaining state law claims; (3) denied as moot AOC’s motion to transfer venue and McAlpin’s motion for leave to file her response out of time; and (4) scheduled a hearing for September 5, 1997, to consider Gahafer’s motion to hold McAl-pin in contempt of the court’s order directing her to pay Gahafer’s fees. The district court never ruled on Gahafer’s contempt motion, however, because the parties, who had been engaged in settlement negotiations since May 23, 1997, executed a final settlement agreement disposing of the litigation on September 22, 1997. McAlpin began the negotiations by demanding $1,000,000 in exchange for the release of all her claims against AOC. As McAlpin explains in her brief however, “following the entry of the September 2, 1997, Order, Brandon convinced [her and her husband] that they had no alternative but to settle their claims for ■ essentially whatever amount the Defendants wеre willing to pay” because if they did not settle, Gahafer would proceed with his motion for contempt and the estate would lose all of its stock in AOC.
Gahafer and the Plaintiffs warrant and represent to the Defendants that they have returned any and all documents, including copies thereof, which were obtained as the result of the performance of Gahafer’s duties as receiver.... Simultaneously with the execution of this Agreement Gahafer and the Plaintiffs have executed an Agreed Order providing that any and all copies of the Receiver’s First Interim Report will be delivered to the Defendants by Gahafer and/or Ms attorneys. The Plaintiffs agree to return to the Defendants any and all documents which they have concerning AOC and/or its operations.... The Plaintiffs and Gahafer agree that from and after the date of this Agreement, they and anyone claiming through them will forever refrain from making any claim or demand or filing any claim in any form or before any court or administrative agency that i) Robert Mock or anyone claiming through him is or was a shareholder of AOC, ii) that any of the Defendants has committed any of the acts described in any of the litigation described in the preambles to this Agreement, or iii) that any of the Plaintiffs have any claims against any of the Defendants.
In addition to providing for the release of McAlpin’s claims against the Defendants, the Settlement Agreement provided for the release of all claims that McAlpin might assert against her attorneys, Messrs. Brandon, Gilfedder, and Nash. Although McAlpin alleges in her brief on appeal that she was “not informed” that the Settlement Agreement “contained a release of [claims against her] counsel,” Appellant’s Br. at 28, both McAlpin and her husband personally initialed each page of the Agreement. The Agreement did not provide for the district court to retain jurisdiction over its terms or enforcement.
On September 24, 1997, the district court entered an Agreed Order of Dismissal With Prejudice, which provided in pertinent part:
The parties being in agreement and the Court being otherwise sufficiently advised that the parties hereto have settled their disputes, .... the Court hereby orders:
1. That the Complaint filed herein is DISMISSED AS SETTLED WITH PREJUDICE AS TO ALL CLAIMS asserted therein and this action is Ordered stricken from the docket of this Court in its entirety.
2. That this Court’s Order of August 29, 1997, is hereby amended to provide that Count II of the Complaint is Dismissed with Prejudice.
3. That the Court appointed Receiver, Morris Gahafer, is hereby ordered to turn over to the Defendants any and all copies of the Receiver’s First Interim Report as well as any drafts thereof or any other documents which hе may have obtained or generated as a result- of the performance of his duties as Receiver herein.
As is apparent from the language of the order, the district court did not expressly retain jurisdiction over the Settlement Agreement nor order McAlpin herself to take any action, although the court’s directive to Gahafer incorporated his (and potentially McAlpin’s) duties under the Agreement.
In June 1998, McAlpin and her husband retained new counsel (Rambicure, Miller & Kuebler, hereinafter referred to as “RMK”) to pursue a legal malpractice suit against the -attorneys who represented the
Aware that McAlpin was, in her malpractice action against her former attorneys, asserting claims of Robert Mock’s stock ownership in violation of the Settlement Agreement, AOC and its co-defendants moved the district court on November 4, 1998, pursuant to Federal Rule of Civil Procedure 70,
In response to the district court’s January 15 order, which McAlpin asserts was entered without jurisdiction and in violation of due process because the district court did not hold an evidentiary or other hearing before holding her in contempt, McAlpin amended her malpractice claim to remove all direct references to Robert Mock and returned to the defendants non-privileged documents that McAlpin’s counsel believed were rеlevant to AOC or upon which a claim against the defendants could be based. McAlpin’s counsel then furnished the defendants with a privilege log identifying documents that were withheld from production under the district court’s order.
McAlpin timely appealed the district court’s January 15 order to the Sixth Circuit on the basis that the district court lacked jurisdiction to enforce the Settlement Agreement. Before the appeal was scheduled for hearing, however, the defendants filed a motion (entered April 1,1999) for further contempt proceedings based on McAlpin’s failure fully to comply with the order. Pursuant to this motion, the district court ruled, on May 3, 1999, that McAlpin had failed to comply with the court’s January 15 order and that McAlpin would risk being held in further contempt if she did not file proof with the court of full compliance with the January 15 order within ten days of entry of the May 3 ruling. The district court further held that, based on paragraph 9 of the Settlement Agreement, McAlpin was barred from asserting any privileges that wоuld allow her to retain any AOC-related documents. Finally, the court stated that its January 15 order directing McAlpin to delete from her malpractice complaint any claims referring to Robert Mock’s stock in AOC required the removal not only of direct references to Mock, but of “any statement that infers or implies that Robert Mock owned any shares of AOC.” On May 13, 1999, McAlpin filed a motion to stay the district court’s proceedings pending an appeal to this panel. The district court granted McAlpin’s motion on June 28, 1999, and the case ,was staying pending a decision by this court. .
II
This court reviews de novo the district court’s determination that it had subject matter jurisdiction to enforce the terms of the settlement agreement. See Caudill v. North American Media Corp.,
Although on August 11, 1999, a panel of this court denied the defendants’ motion to dismiss this appeal for lack of jurisdiction, the defendants reassert in their brief that we cannot hear McAlpin’s challenge to the district court’s order holding her in contempt because that order was not a final, appealable judgment, but merely an enforcement of the district court’s earlier rulings.
The motions panel properly denied the defendants’ request to dismiss this appeal. In their motion to dismiss, the defendants first argued that the district court’s order of civil contempt was not appealable under Fox v. Capital Co.,
The motions panel also properly rejected the defendants’ second argument against appellate jurisdiction — that the district court’s January 15 order holding McAlpin in contempt was not a new order, but merely an enforcement of the requirements that the court imposed on McAlpin in the course of the underlying litigation. In support of their position, the defеndants cited Whittington v. Milby,
The District Court’s Jurisdiction to Issue the 1999 Orders
Because the district court held McAlpin in contempt of settlement terms that were not incorporated into any of the court’s orders, we must determine whether the district court had jurisdiction to enforce the settlement agreement in its entirety and, if not, whether the district court’s contempt judgment was within the scope of its jurisdiction to enforce its prior orders against the parties.
Jurisdiction to Enforce the Settlement Agreement
Although it had already dismissed the parties’ suit with prejudice and stricken the case from its docket, the district cоurt cited Federal Rule of Civil Procedure 60(b)(6) as authority for enforcing the Settlement Agreement against McAlpin. Rule 60(b)(6) may, in certain circum
In Kokkonen, the Supreme Court held that the district court in which the case was settled did not have jurisdiction tо enforce the provision of the settlement agreement requiring the petitioner to return certain files to the respondent because the district court did not expressly retain jurisdiction over enforcement of the agreement or incorporate the agreement’s terms in its dismissal order. See Kokkonen,
The Court proceeded to explain that ancillary jurisdiction to enforce a settlement agreement cannot be premised on a “relationship so tenuous as the breach of an agreement that produced the dismissal of an earlier federal suit.” Id. at 380,
[T]he only [relevant] order [issued by the district court] was that the suit be dismissed, a disposition that is in no way flouted or imperiled by the alleged breach of the settlement agreement. The situation would be quite different if the parties’ obligation to comply with the terms of the settlement agreement had beеn made part of the order of dismissal — either by separate provision (such as a provision “retaining jurisdiction” over the settlement agreement) or by incorporating the terms of the settlement agreement in the order. In that event, a breach of the agreement would be a violation of the order, and ancillary jurisdiction to enforce the agreement would therefore exist. That, however, was not the case here. The judge’s mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order.
Id. at 380-81,
It is well settled that “[t]he mere reference in [a dismissal] order to [a settlement] Agreement does not incorporate the Agreement into the order.” Scelsa v. City University of New York,
Nor can Rule 60(b)(6) be used to support the district court’s attempt to enforce provisions of the settlement agreement not expressly incorporated in the dismissal order. Relief from a final judgment under Rule 60(b) is an “extraordinary remedy that is granted only in excep
(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, Etc. On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for .... (6) any other reason justifying relief from the operation of the judgment.
Fed.R.Civ.P. 60(b)(6).
As the Supreme Court acknowledged in Kokkonen, some circuits have held that a dismissed suit can be reopened under Federal Rule of Civil Procedure 60(b)(6) by reason of breach of the agreement terminating the litigation. See Kokkonen,
Contrary to the defendants’ assertion, the determination by some courts that (1) “repudiation of a settlement agreement that terminate[s] litigation pending before a court constitutes an extraordinary circumstance” justifying relief under Rule 60(b)(6), and (2) that Kokkonen permits parties to “revive a suit under Rule 60(b)(6) when a settlement agreement has been breached,” Leal v. Town of Cicero,
In this case, the district court’s failure expressly to retain jurisdiction over the Settlement Agreement or to incorporate more than one of the settlement terms in its dismissal order precludes it from enforcing unincorporated terms against the parties. The portions of the district court’s January 15 and May 3,1999, orders directing McAlpin to comply with paragraphs 8 and 9 of the Settlement Agreement are therefore invalid. However, the district court may on remand uphold the portions of the orders directing McAlpin to return confidential documents to the defendants if the court determines that its 1997 rulings directing Gahafer to return all documents seized during his receivership also bound McAlpin, either directly or because she was complicit in the retention of the documents at issue.
Jurisdiction to Enforce Prior Orders
Although Article III limits a district court’s jurisdiction to enforce the terms of a settlement agreement, the district court always has jurisdiction to enforce its own orders. See Kokkonen,
McAlpin argues that the district court erred in holding her in contempt of its 1997 orders directing the return of confidential documents to AOC because those orders were directed only to Gahafer, and that “even if the orders could be artfully construed to imply that [she] was required to perform a specific act,” the defendants failed to establish “by clear and convincing evidence that [she] violated any of the[] orders.” Appellants Br. at 43; see alsо EEOC v. Local 638, Local 28 of Sheet Metal Workers’ Int’l Ass’n,
Ill
The Supreme Court’s opinion in Kokko-nen precludes the district court from enforcing portions of the Settlement Agreement that were not expressly incorporated in either its dismissal order or in its prior orders against the parties. The defendants’ proper remedy for these violations lies in a separate action for breach of the Settlement Agreement, in which suit the defendants could also request a preliminary injunction enjoining McAlpin from proceeding with her malpractice action to the extent that her case depends on claims she promised to abandon under the Agreement. See Downey,
A proper reading of the Supreme Court’s opinion in Kokkonen compels the conclusion that the district court lacked jurisdiction to enforce terms of the Settlement Agreement that were not expressly incorporated in its dismissal or other orders. The portions of the district court’s January and May 1999 rulings directing McAlpin to comply with paragraphs 8 and 9 of the Settlement Agreement are therefore invalid. Whether the portions of the, orders pertaining to the return of AOC documents may be enforced against McAl-pin depends on whether the district court’s March 10 and September 24, 1997, orders concerning the return of confidential documents can be construed to bind her even though they expressly refer only to Gahafer. Because the district court is in the best position to determine the scope and meaning of these orders, we REVERSE the judgment holding McAlpin in contempt of court and REMAND the case for further proceedings consistent with this opinion.
Notes
. Although AOC was administratively dissolved on November 7, 1996, for failing to file an annual report, it remains a party to this litigation and is referred to as the principal or primary defendant because it is the corporation in which Robert T. Mock, McAlpin’s predecessor in interest, allegedly owned stock.
. The 1983 action filed was dismissed by the Pulaski Circuit Court for improper venue. The 1986 action was dismissed by the Knox Circuit Court for lack of prosecution, and the Kentucky Court of Appeals found that dismissal to be without prejudice. McAlpin ■ brought the 1988 suit in Pulaski Circuit Court, but voluntarily dismissed the case upon learning that her father's 1983 suit in that court was dismissed for improper venue.
. In her affidavit in support of her motion for receivership, McAIpin requested that the court "appoint a receiver to oversee the day to day operations of AOC and insure that no documents or records are destroyed, altered, or concealed, or corporate assets dissipated.”
. The court subsequently discovered that Ga-hafer's bond was posted only as security for any damages that AOC might sustain as a result of Gahafer’s failure properly to account for funds that came into his possession as the company’s receiver.
. The report stated, among other things, that AOC’s records evidenced Robert Mock’s ownership of 13 shares of AOC stock and that AOC appeared to have engaged, in some interested transactions, but that Gahafer needed to review additional witnesses and interview certain AOC management employees to determine thе extent of any wrongdoing.
. McAlpin explains in her brief on appeal that she was unable to obtain the bond because the Mock Estate’s only asset — its alleged stock ownership in AOC — was at the most worth $457,757.51, an amount insufficient to cover the obligation on a $500,000 bond. McAlpin blames her attorney for her failure to obtain the bond, alleging that, had "Brandon not chosen to rely on the questionable AOC financial statements and ... instead undertaken . any due diligence to investigate and/or obtain any independent valuations of just the real estate owned by AOC,” a bond would have been issued because the insurers McAlpin contacted refused to issue a bond based on the alleged value of the Mock Estate’s stock in AOC as reflected in AOC’s March 1997 financial statement.
. Gahafer's First Interim Report refers to corporate documents evidencing Robert Mock's ownership of 13 shares of AOC slock.
. In her malpractice suit, McAlpin alleges that she would not have agreed to the settlement or to the language in the release "had it not been for the fear of losing the Estate's AOC stock and stock options for no compensation whatsoever, the erroneous and misleading statements from [Brandon], the extreme pressure of the continued threat of being held in contempt on Gahafer's pending motion, and the erroneous representations of the value of the company.” Appellant’s Br. at 29.
. Rule 70, Judgment for Specific Acts; Vesting Title, provides, in pertinent part:
If a judgment directs a party to execute a conveyance of land or to deliver deeds or other documents or to perform any other specific act and the party fails to comply within the time specified, the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and the act when so done has like effect as if done by the party. On application of the party entitled to performance, the clerk shall issue a writ of attachment or sequestration against the property of the disobedient party to compel obedience to the judgment. The court may also in proper cases adjudge the party in contempt....
. Stating, in pertinent part, that "Receiver's counsel shall retain all copies of the Receiver’s First Interim Report and the Receiver shall not disclose to anyone other than his counsel anything regarding the substance of his work as Receiver herein.”
. Stating, in pertinent part, that "the Receiver shall return all documents taken from the defendant's premises, that the Receiver shall not disclose any document or portion thereof to anyone, and that any copies made shall also be returned to the defendants.” The order also precluded McAlpin from deposing Gahafer and stated that "the Receiver shall not be required to produce any document or respond to any discoveiy herein.”
. Dismissing the action with prejudice and stating, in pertinent part, that the "Receiver, Morris Gahafer, is hereby ordered to turn over to the Defendants, any and all copies of the Receiver's First Interim Report as well as any drafts thereof or any other documents which he may have obtained or generated as a result of the performance of his duties as Receiver.”
. The continuing viability of the holding in Fox was called into question in Byrd v. Reno,
. Although the statement in the court's March 10, 1997, concerning the return of confidential documents to AOC is directed primarily at Gahafer, the portion of the order direcling that "any copies made shall also be returned to the defendants” is written in the passive voice and could possibly be construed to bind McAlpin. See infra pp. 504-05.
Concurrence Opinion
concurring.
I concur in the opinion of Judge Boggs, but add a few comments that seem appropriate.
The district court’s initial order naming Gahafer as Appalachian Oil Company’s (“AOC”) receiver was unfortunate and ill-advised, especially without the posting of a proper receiver’s bond adequately to protect AOC in the even of the receiver’s improper or unauthorized actions. This regrettable action has engendered multiple court filings, great expense to the parties, and recriminations. I am not sure that Gahafer himself did not engender some of these problems, and an examination of his actions might show his awareness that a proper and substantial bond was never posted to protect AOC. It was further regrettable that this receivership action
It would appear, furthermore, that Ga-hafer’s actions, vis-a-vis McAlpin seeking large fees, were taken with knowledge that plaintiffs had few, if any, assets to satisfy his claim and that such action might force a settlement with AOC by his former “clients.”
If McAlpin is correct that the original contempt order was entered against her without a hearing, I would question the propriety of the district court’s action in that regard. In any event, pursuant to the opinion and holding under Kokkonen v. Guardian Life Ins. Co.,